Double taxation

Double taxation Applies when a single issue is subject to double or multiple comparable taxes. Double taxation occurs particularly frequently when income is transferred, e.g. profits from the country in which the income is generated to another country. According to the principle of taxing world income in both countries, this income may be taxed with income tax or corporation tax. The property used to generate income can also be subject to property tax in both countries. At present, however, no wealth tax is levied in the Federal Republic of Germany. In the case of gifts or inheritance, inheritance or Gift tax arise twice. To avoid double taxation in the transnational area, many states have concluded double taxation agreements with each other.

A double or multiple exposure to value added tax generally does not apply to sales in the countries that have introduced the VAT system. In the EC countries in particular, cross-border sales only lead to a simple sales tax burden. The reason is that in the case of cross-border sales, the goods are exempt from sales tax in the exporting country and are charged with sales tax in the importing country.

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